Are you ready for the new tax year?

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By Mark Mitchell
Know Your Money Editor

The end of the tax year is looming and consumers might be wise to inform themselves of some of the changes that will be introduced from April 6th.

Some of the changes could effect your money and require action to ensure that they are made the most of.

ISA changes

As announced by chancellor Alistair Darling in last year's Budget, the amount savers can put into ISAs each year will be increased from £7,200 to £10,200, £5,100 of which can be held in a cash ISA.

The new limit came into force from October 6th 2009 for people born before April 6th 1960 and will be introduced for everyone else over the age of 18 on April 6th 2010.

People with an ISA may want to take advantage of the opportunity to use their allowance before the end of the tax year - and the ISA deadline - on April 5th.

Fair Investment's Rachel Mason recently suggested that this method of saving could be well worth considering for those looking to make a little money.

She said: "Based on this year's limits, a couple who both invest their entire cash allowance into an instant access account like the Scottish Widows E-Cash, which currently has a rate of 2.10 per cent, could earn £151.20 between them in a year and using next year's limits, this would be £214.20."

Savers on the increase?

A recent report from Nationwide suggested that keeping saving aside is on the increase as consumers feel that now is the right time to take action to make the most of their cash.

Of the people who took part in the report in February 2010, 80 per cent explained they would class themselves as a regular or occasional saver.

They stated: "As the end of the tax year gets ever closer, we expect to see more and more people open or top up their ISAs before they lose this year's annual ISA allowance forever.

"There are very few opportunities in life to 'beat the tax man' and one of those opportunities is to take out an ISA, so I encourage eligible savers to use their ISA allowance as soon as possible. We estimate that cash ISAs alone are saving consumers over £680 million in tax over a year, so ISAs can clearly make a substantial saving.

"So although we cannot say for sure, the rise in the total number of regular and occasional savers could be something to do with the fact that this time of year often sees a rise in the number of savers taking out ISAs."

Nationwide's Savings Index also revealed improved confidence in making savings, with 19 per cent of Brits saying they considered it a good time to build up a nest egg given the economic situation - a three per cent increase on January.

Making the most of it

ISA season is in full swing and now could be the time to make a quick move with your savings. A couple of new deals are below:

Santander's Flexible Isa

This ISA pays a rate of 3.5 per cent including a 3 per cent bonus (variable) for 12 months. The rate is guaranteed to be at least 3 per cent above Bank Rate and with a minimum rate of 3.5 per cent for the first 12 months.

Savers can invest a minimum deposit of just £1. Transfers in are not accepted. Funds can be accessed immediately without notice or penalty. The account can be operated in branch, by telephone or online by savers aged 16 and over.

Barclays - Golden Isa Issue 2

This account, launched by Barclays recently, offers a monthly rate of 3.06 per cent, including a one per cent bonus for 12 months. Savers can invest a minimum deposit of £1. Transfers in are not accepted. Funds can be accessed immediately without notice or penalty. The account can be operated by savers aged 16 and over in branch, by telephone or online.

Important Notice
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.